- A Charles Schwab survey revealed that 15% of US retail investors began investing in 2020.
- The survey also debunked the notion that new entrants are mostly young and aggressive.
- Schwab calls this recent addition Generation Investor, or Gen I.
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A recent survey from Charles Schwab indicates that around 15% of retail investors in the US began their investing career in 2020.
The survey also debunked the notion that the recent additions to the investing crowd are mostly younger, more aggressive traders. Conducted from February 1 to February 16, the survey showed that the new investors are more bullish about their financial prospects compared to those who began trading before 2020.
Furthermore, most of them are planning for their futures with 72% saying they invested for long-term gains in contrast to the 56% who invested before 2020.
“We’ve seen tremendous growth and engagement among individual investors over the past year as a result of lower trading costs, new products and services aimed at greater ease and accessibility, and the investing opportunities presented by market volatility,” Jonathan Craig, Charles Schwab senior executive vice president and head of investor services said in a statement.
Schwab calls this recent addition Generation Investor — or Gen I — defined not by their birth years but by when they started to invest.
Gen I has a median age of 35 and is typically younger than those who began investing before 2020 who, on average, is 48. Gen I earns about $76,000 per year, with half of them living paycheck to paycheck. The majority, or 60%, said the pandemic has had a financial impact on them.
Yet unlike previous generations, those in Gen I are more resilient, the survey showed. More than half already started to build an emergency investing fund and more than half also strived to have an additional source of income. Gen I also better kept track of investments than pre-2020 investors.
“While it’s exciting to see this new generation of investors, the industry now has a call to action – to give this group the tools and services they need to be successful over the long term,” Craig said.
Only a third of Gen I, however, has a written financial plan in place. The survey also found that many admitted they have not given the tax efficiency of their portfolios much thought. Still, more than half of Gen I members said they intend to save more once the pandemic dies down.
“Now that they’ve dipped their toes into investing, Gen I is eager to keep learning and evolving its strategies to successfully build wealth for the long-term,” said Andrew D’Anna, senior vice president for Schwab’s retail client experience.
The rapid rise of retail investors through the pandemic has been a huge force driving the stock market the past year, enabled by commission-free trading applications, government stimulus checks, and pandemic boredom as people continue to spend most of their time at home.
The online study surveyed a national sample of 1,000 Americans aged 21 to 75 and an augmented sample of 200 investors who began investing in 2020 for comparison.
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